Worker Shortage Looming As Construction Employment Reaches 14-Year Low

Despite an increase in July, the industry’s job growth has slowed while demand for construction remains strong.

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Construction employment in July climbed to the highest level since February 2009, while the number of unemployed workers with construction experience shrank to a 14-year low, according to an analysis by the Associated General Contractors of America. Association officials cautioned that the diminishing pool of available qualified labor may be having an impact on the industry’s ability to meet growing demand.

“It is encouraging to see construction employment rising again, but the industry could hire many more workers if they were available,” said Ken Simonson, the association’s chief economist. “The lack of experienced construction workers may be impeding the industry’s ability to start or complete new projects. The recent acceleration in construction spending may soon level off unless the sector can draw in more workers with the right skills.”

Construction employment totaled 6,383,000 in July, the most since February 2009, but the total rose by only 6,000 in July and by an average of only 7,200 per month over the past five months, Simonson noted. The number of unemployed workers who reported last working in construction totaled 474,000, the lowest amount since 2001.

“The sector’s job gains in the past five months have been intermittent and relatively sluggish despite signs of accelerating demand for construction,” Simonson said. “The latest Census Bureau data show the amount of construction spending is rising at the fastest rate since 2006, and there are several indicators—such as the steady increase in hiring of architects and engineers—that suggest demand for construction will remain strong, but contractors may have difficulty finding enough workers to take on all those projects.”

Overall construction employment rose by 6,000 from June to July, far below the monthly average of 19,250 between July 2014 and July 2015, Simonson noted. Meanwhile, employment at architectural and engineering services firms climbed by 3.6 percent since July 2014, suggesting that more workers are being hired to design future construction projects, the economist pointed out. Construction spending put in place—a measure of current industry activity—jumped 12 percent from June 2014 to June 2015, the Census Bureau reported on August 3.

Association officials said that a number of factors are contributing to the shrinking pool of available labor, including the fact that many aging workers are retiring, while other workers who lost their jobs during the downturn left the industry for other sectors.  They added that the lack of high school-level programs that expose students to construction as a potential career path means few graduates are pursuing choosing to work in the industry.

“We are doing many students a real disservice by not telling them about how they can make a good living working in construction,” said Stephen E. Sandherr, the association’s chief executive officer, noting that the association’s Workforce Development Plan calls for increasing the number of career and technical education programs nationwide. “The more options we give students, the more likely they are to succeed.”

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